Post Session: Quick Review

Indian equity markets traded in a narrow range throughout the day and ended the session with modest cut. The equity benchmarks recouped losses in afternoon trade turning in positive terrain driven by index heavyweight Reliance Industries that rallied to hit a fresh 52-week high, but it was short lived. The equity benchmarks made a negative start and traded slightly in red in early deals tracking weak global cues and profit booking. Investors took note of Nobel laureate Paul Krugman’s statement that he was puzzled by demonetization and that it was a blunt instrument to tackle the problem of black money and corruption. He said that Prime Minister Narendra Modi’s performance is a bit below expectations and called on the government and RBI to spur economic growth by cutting rates and increasing fiscal spending. Meanwhile, former Union Finance Minister P Chidambaram said that the aim was for one indirect tax to subsume all the other indirect taxes, but this GST fails to achieve that. Some concerns also came with the report that India slipped by one spot to become the fourth-largest foreign investor into the UK. India set up 127 new projects in Britain last year and safeguarded 7,645 existing jobs as a result and created 3,999 new jobs in 2016-17. Investors shrugged off the report that the government’s revenue collection during April-June of current fiscal year has shown a good growth. The net direct tax collection for the first quarter (April-June) 2017-18 stood at Rs 1.42 lakh crore, registering a growth of 14.8% higher than the net collections for the corresponding period of last year, on the back of surge in advance tax payments. According to the Ministry of Finance, the net direct tax collection represents 14.5% of the total Budget estimates of direct taxes of Rs 9.8 lakh crore for FY18.

On the global front, Asian markets closed mostly in red. The Bank of Japan offered to buy an unlimited amount of JGBs on Friday, as it sought to put a lid on domestic interest rates pushed higher by the broad sell-off in developed market bonds. Its aggressive bond buying operations sent most Japanese government bond yields lower and weakened the yen. European markets were trading in red as investors look out for fresh economic data, a G-20 meeting in Hamburg and continue to mull the possible end of monetary stimulus from central banks. Output by British factories unexpectedly fell in May, suggesting the economy has struggled to gain much momentum after a slow start to 2017 and raising questions about the likelihood of the Bank of England raising interest rates this year.

Back home, Tata Teleservices (Maharashtra) closed firm on reports of a possible merger between telecom companies, Tata Group and Bharti Enterprises. The two companies have held exploratory talks to evaluate a mega alliance involving their telecom, overseas cable and enterprise services, and direct-to-home TV businesses. Gayatri Projects closed in green after the Government of Singapore Investment Corp (GIC) acquired a 6.2% stake in the Indian infrastructure company. PSU Banking stocks were buzzing on reports that the government is likely to infuse more money in state-run banks amid crackdown on bad loans and increasing capital needs under Basel III guidelines. The exact amount will be decided after the first quarter results of banks are available.

The BSE Sensex ended at 31358.58, down by 10.76 points or 0.03% after trading in a range of 31286.62 and 31426.29. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.03%, while Small cap index was up by 0.28%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.74%, Energy up by 1.63%, Healthcare up by 1.04%, Telecom up by 0.64% and Oil & Gas up by 0.48%, while IT down by 0.73%, TECK down by 0.47%, Consumer Durables down by 0.38%, FMCG down by 0.30% and Bankex down by 0.24% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 3.67%, Reliance Industries up by 3.40%, Dr. Reddy’s Lab up by 1.35%, Sun Pharma up by 1.02% and Kotak Mahindra Bank up by 1.02%. (Provisional)

On the flip side, ICICI Bank down by 1.38%, Hero MotoCorp down by 1.16%, Asian Paints down by 1.13%, Infosys down by 1.11% and ONGC down by 1.08% were the top losers. (Provisional)

Meanwhile, amidst a strong initial public offer (IPO) pipeline along with a favourable capital markets environment, the IPO financing market is expected to remain buoyant during the current financial year 2017-18. According to the credit rating agency, ICRA’s latest report, the present, average size of the IPO financing market which is around Rs 175 billion to Rs 225 billion per issuance, could rise to Rs 650 to 700 billion for issuances which are a large in size as well as with higher investor interest.

The credit rating agency further said that in the previous financial year, the IPO financing market remained vibrant on account of surge in high net worth individual (HNI) interest in IPOs to take benefit on the listing gains. The median subscription level for the non-institutional investor (NII), which include HNI investors, category stood at 80 times for the IPOs in FY2017, as against 2 times for FY2016. This steep increment in the median subscription has created market for providing short-term capital to the HNI investors for the IPO application.

The report also noted that the field is dominated by non-banking financial company (NBFC) arms of some of the leading players in the capital markets and wealth management businesses. Its analysis of the issuances during the period from April 2016 to June 2017 shows that out of the total of 31 issuances, 24 issuances were listed at a premium, with median listing gains of 14%.

The CNX Nifty ended at 9663.30, down by 11.25 points or 0.12% after trading in a range of 9642.65 and 9684.25. There were 20 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Lupin up by 3.58%, Reliance Industries up by 3.29%, Aurobindo Pharma up by 2.23%, Bharti Airtel up by 1.64% and Zee Entertainment up by 1.41%. (Provisional)

On the flip side, Bharti Infratel down by 2.34%, Indiabulls Housing down by 1.73%, ONGC down by 1.61%, Asian Paints down by 1.59% and Vedanta down by 1.59% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 9.51 points or 0.13% to 7,327.77, Germany’s DAX decreased 31.44 points or 0.25% to 12,349.81 and France’s CAC decreased 23.27 points or 0.45% to 5,129.13.

Asian equity markets ended mostly in red on Friday, tracking weak overnight cues from Europe and the US after data showed weaker-than-expected US private sector job growth in June and global sovereign debt yields rose across the board amid bets the European Central Bank will gradually remove policy accommodation in the near future. Simmering tensions in the Korean peninsula and caution ahead of this week's G20 summit as well as the all-important US jobs report, which includes both private and public sector jobs, due out later in the day also weighed on markets. Japanese shares ended lower after global shares tumbled, despite the yen weakening after the Bank of Japan's decision to raise its purchases of government bonds in its market operations. The dollar hit a seven-week high against the yen as the central bank pledged to buy unlimited amounts of government debt with a 10-year maturity at a yield of 0.11 percent. However, Chinese shares ended higher despite concerns over slowing economic growth and expectations of higher interest rates globally.